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Insolvencies Continue to Decline, but Will a Changing Regulatory Landscape Further Disrupt Australia’s Retail Sector?

Corporate Finance & Restructuring | Retail & Consumer Products

February 20, 2018

Total insolvencies were down in December compared to November, and in 2017 compared to 2016, but businesses shouldn’t be complacent in the era of disruption.

FTI Consulting’s analysis of the Australian Securities and Investments Commission (ASIC) insolvency statistics shows that
the number of companies entering external administration across Australia fell from 669 in November 2017 to 534 in
December 2017.

Of the 534 companies that entered administration in December, the highest proportion came from the ‘other’ personal
and business services sector (213), followed by construction (84), accommodation and food services (75), retail trade (32),
and transport, postal and warehousing (27). Court wind-ups and creditor wind-ups fell from November to December,
from 194 to 154 and 318 to 255, respectively.

The total number of insolvencies in 2017 was 7,811, compared to 8,505 in 2016 and 10,164 in 2015.

In FTI Consulting’s view, the steady decline in insolvencies over the past three years indicates that companies have
become better at proactively restructuring their businesses and negotiating agreements with their stakeholders, rather
than showing a general improvement in the economy. FTI Consulting is also observing challenges and new trends among
companies in the retail sector, which was among the first to be substantially affected by digital disruption.